A good credit history is good news for you
You don’r have to do business with everybody: Performing credit checks should be a routine part of your credit management procedure.
THE BEST WAY to ensure your customers pay their bills on time, every time, is to ensure they have a good credit history. Performing a credit check should be part of your credit management process, as it will determine whether or not you should do business with this customer, and on what grounds you may decide to.
Xero can help perform credit checks
All new customer should be happy to furnish you with references of their previous creditors, whom you should contact for a reference. A good question to ask is the average time it took the client to pay, and the payment terms they were given — were they the customary payment terms given to all clients?
If you’re using Xero, they’ve recently partnered with Equifax, the credit company formerly known as Veda, to deliver credit checks. Based on the information entered into Xero — address, business name, location, ABN or ACN — Xero will provide you with an indicator of their credit risk.
There’s also the option to purchase a SwiftCheck credit report from Equifax directly through Xero. SwiftCheck reports cost $19.95.
For more comprehensive reports
The world’s leading credit reporting firm Dun & Bradstreet also offer credit check reports. They’re more comprehensive, but they also come with the price tag to match. Their basic risk reports range from $77 through to $396, while the firm also offers ID verification and ASIC reports, as well as international reporting.
How do credit reporting firms source data?
Credit reporting firms such as Equifax and Dun & Bradstreet source their data from credit card companies, banks, credit unions, retailers, and auto and mortgage lenders. They also receive information from debt collection agencies, and they purchase public records, such as bankruptcies, tax liens and judgements.
Although it’s always good to do your own reference checks and due diligence, credit reporting firms have much greater access to the information that you need to put together a complete picture of a business’s credit history.
Even if your own reference check doesn’t raise any red flags, it’s always wise to pay for a credit check just to be safe.
Visit our website to learn more about implementing credit management processes for your business.
♦♦♦WANT TO IMPROVE CREDIT MANAGEMENT?♦♦♦
WANT TO IMPROVE YOUR CREDIT MANAGEMENT PROCEDURES? Find out more about our new Start Up Academy Cloud Package for smart business people and bookkeepers wanting to tightly control their finances with Xero. This package also comes with our comprehensive “Credit Management Guide”.
Or check out our suite of Xero online training courses, where everything is included! Xero is a great tool for reconciliations, payroll and all day-to-day transactions. Enrol in our Xero online training courses now.